Coronavirus Pandemic – How the Pandemic has Impacted the US Housing Market

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1. The above Case-Shiller Composite-10 (the ten largest housing markets) table shows that the composite grew 2.3% in 2019, followed by a growth of 0.9% in the first half of 2020. San Diego has been the frontrunner in both periods. Though Boston performed very well in 2019, its growth retraced a bit this year. While Denver has been a consistent performer throughout these 18 months, Miami has also picked up some momentum this year. On the other hand, the growth rates of Chicago and New York have been anemic, while lately, San Francisco has been flatlining.

2. The Composite-20, which additionally includes major markets like Atlanta, Dallas, Phoenix, and Seattle, produced slightly better growth rates than the Composite-10. The Composite-20 grew at 2.7% in 2019 but has moderated to 1.2% this year. Phoenix has been the standout winner in both time segments, with 6.1% and 4.1% growth rates, followed by Tampa, Charlotte, Cleveland, and Seattle. Overall, the slopes of the curves are very similar, meaning they have moved sideways this year, especially in Q2.

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3. The regression (7/19 thru 6/20) between the strongest and the weakest markets is quite impressive. After moving from 200 to 204 in the second half of 2019, New York flatlined around 205 in the first half of 2020; in contrast, San Diego steadily moved up from 261 to 272 during these 12 months, contributing significantly to indices' growth. The asymmetric growth rates have lowered the r-squared values. 

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4. Though Phoenix outperformed San Diego 8.5% vs. 4.5%, these two markets have been the hottest between 7/19 and 6/20. Therefore, the regression between them is also more telling, perhaps more apparent. They not only share a near-perfect linear trendline, with a high r-squared value of 0.98, but have also much helped the two composites remain positive this year. 

In a nutshell, contrary to the heaps of market reports praising the monthly growth of the housing market, the Case-Shiller indices, which serve as the de facto data standards of the US housing markets, paint a very different growth picture -- one that is anemic at best, save a few pockets here and there.

Stay safe!

Data Source: Case Shiller Housing Indices

Sid Som

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